MANILA Manila's changing skyline demonstrates a city coming up in the world.
The capital of the Philippines is in the throes of a property boom described as the best in two decades, reflecting the increasing confidence in an economy that only recently began shedding its image as one of the region's basket cases.
Nowhere is it more obvious than at Bonifacio Global City, a commercial and residential property development on a portion of land carved out from Manila's biggest army base.
Originally sold by a cash-strapped government in the mid-1990s, building only got underway in earnest during the last six years after Ayala Land Inc (ALI.PS) took ownership. Under the Spanish-Filipino business clan that runs Ayala, construction is now going at full tilt.
"Work here is 24 hours," said Renel Reyes, an engineer and property manager overseeing a 30-storey tower due to be completed by the year-end.
Soon to be home for Nickel Asia Corp NAC.PS and local conglomerate Aboitiz Equity Ventures Inc (AEV.PS), NAC Tower is just one of several tower blocks under construction. As his own workers carried in sleek aluminum rails, Reyes said the state of the market was obvious to anyone who looked up.
"There are so many tower cranes, a good indicator of the construction boom right now."
Located near Makati, the main business district that grew up in the 1970s, Bonifacio is a project in progress, but rents at 800 peso per square meter ($19.5) are already catching up with its older, established, but saturated rival.
Though rents paid in Makati have recovered almost 30 percent in the last three years, they are still way below the peak of 1200 pesos/sqm ($29) paid before the global financial crisis hit in 2008, data from property manager and consultancy Jones Lang La Salle Leechiu (JLL) shows.
That makes renting in Manila's business districts far cheaper than Hong Kong, Shanghai or Singapore. But then infrastructure remains a drawback, as anyone arriving at Manila's tired, old airport quickly realises.
Still, as Bonifacio lures companies tired of Makati's cramped spaces with its sprawling parks, luxury hotel chains and Italian supercar makers have followed the money.
Lamborghini opened its first Philippine showroom, side by side with Ferrari, in Bonifacio, while Hyatt and Shangri La hotels are opening there soon.
Office space in most new buildings are snapped long before completion. At the NAC Tower, for example, only six floors remain un-let, but Reyes said they have potential takers.
Take up of new office space this year is set to hit a record 400,000 to 450,000 sqm, up as much as 25 percent from last year, according to Jones Lang and CBRE Philippines, another of the country's biggest property manager and advisers.
"Pre-leasing is back," said Rick Santos, chairman of CBRE. "We are now experiencing the best real estate market in the Philippines in the last 20 years."
The primary driver of demand for office space comes from business process outsourcing (BPO) firms catering for European and American multinationals that want to cut costs.
With one of the region's fastest growth rates, GDP grew 6.1 percent in the first half, the Philippines has shown resilience in the face of falling demand in the West and China, that other more export driven economies must envy.
Analysts say the Philippines could achieve its first investment grade sovereign debt credit rating in the next 12 months, about seven years after ending its debtor-nation status with the International Monetary Fund.
Strong private and public consumption has underpinned growth, while inflows of foreign capital have driven the stock market to new peaks and the peso to near five-year highs.
An anti-corruption drive launched soon after President Benigno Aquino came to power in 2010 has help the Philippines' image in the eyes of foreign investors.
Low inflation, low interest rates, and a ready supply of reliable, English-proficient labor are strong draws for foreign businesses seeking to reduce costs by expanding in Southeast Asia.
The vibrancy is evident in Bonifacio, where shops are open until midnight and fast-food chains and coffee shops cater round the clock, mainly for call centre employees.
The BPO sector accounts for 80 to 90 percent of office space take up in the country, and is a major source of employment for the country's nearly half a million new college graduates annually.
The industry is forecast to double its current employee base of more than 600,000 by 2016 as western companies send more accounting, legal, data processing and other back-office jobs to the Philippines, fuelling sustained growth in demand for office space.
But steady growth in demand from the traditional front office market such as banks, insurance firms, and representative offices is also fuelling the property boom.
CBRE's Santos saw the Philippines, known as the world's call center capital, fast becoming Asia's back office banking hub.
JP Morgan Chase, HSBC (HSBA.L), Bank of America (BAC.N), Citibank (C.N), ANZ (ANZ.AX), and Deutsche Bank (DBKGn.DE) have all transferred critical back office processes to Manila in the last five years, while Wells Fargo (WFC.N) is among the more recent newcomers.
Rents are expected to stabilize in coming years as new office space totaling at least 1.3 million sqm become available in 2013 to 2015, according to Jones Lang, with little danger of property bubbles as supply is just keeping up with demand.
Outside Manila, a similar transformation is unfolding, with industrial parks, especially those close to the capital and devoted to manufacturing, drawing more foreign firms than ever before, despite cribs about the high price paid for power.
At least the increase in suppliers has meant the power outages that the Philippines was notorious for in the 1990s are now no more than a bad memory.
"What we are seeing now is the re-emergence of manufacturing, which is really good for the economy because manufacturing employs people that the BPO industry won't employ," Lindsay Orr, Jones Lang chief operating officer, said.
Two hours to the south, at First Philippine Industrial Park (FPIP), in Batangas province, land prices have jumped up to 60 percent from two years ago, while lease and rent rates have climbed a modest 10-15 percent.
B/E Aerospace Iinc BEAV.O, the world's top supplier of aircraft cabin interiors, opened its first Asian manufacturing plant there last month. Japanese firms led by Canon's (7751.T) Philippine unit also moved in this year, and FPIP president Hector Dimacali expects revenue to double this year.
"We are seeing big growth that we have never seen in the past," Dimacali said.
($1 = 41.1200 Philippine pesos)
(Editing by Simon Cameron-Moore)